Steel Price Rise Due in next 3 to 7 Weeks

BlueScope Distribution has notified customers of an impending two tier price rise in the coming weeks. It involves a base steel rise of between $60 to $120 per tonne on most product groups. As well they will be implementing specific surcharges to recoup key costs. These surcharges will be provided shortly.

Steel Shed Prices will rise with Australian Steel?

This comes after a significant bonus of over $3 million was paid to Key BlueScope Management (11 people) as a reward for leadership – not profit incentive? The notification states that volitilty in steel prices, rising labour costs, rising freight costs, rising processing costs, rising warehouse costs, and a rise in general utilities are the reasons. Along with the iron ore and coal price increase that has caused the steel price rise – the others will be included in the additional surcharges.

They state they have begun to receive notice from their steel suppliers (BlueScope Steel) of pending price increases. This does not look good for further sales of BlueScope Steel in the shed industry. With imports on the rise at cheaper prices currently – this price rise will further erode steel sales by BlueScope.

It will also follow by a notification by One Steel on its price increase – so many of the big shed manufacturers will be importing direct to keep competitive in the shed industry. Many of the big reseller shed companies will want to lock in prices for as long as possible to avoid this increase. Negotiations are already occurring between some of the big rollformers and BlueScope, along with talks between rollformers and shed companies.

Have you been told of this price rise?

Does ShedSafe guarantee that your shed is in fact safe?

No. If your shed complies to The Building Code of Australia then your chances are far higher.

Does ShedSafe publish or contribute to the Building Code of Australia?

No. It copies large slabs of it in the “Design Guide Portal Frame steel sheds and garages”.

Does ShedSafe own or contribute to the AS/NZS 1170.2 2011 (Structural Design Actions : Wind Actions)?

No it was prepared by Joint Technical Committee BD-006 and was approved on behalf of the Council of Standards Australia on 23 November 2010 (published on 30 March 2011).

Who owns ShedSafe?

Shedsafe is owned by the ASI (Australian Steel Institute). The ASI was started using some large grants from Bluescope and Stramit.

Has ShedSafe ever rejected an applicant?

There have been no documented or rumoured rejections. Not bad for an accreditation that has to be earned and can’t be purchased.

Is ShedSafe Independent?

No.

How is Shedsafe funded?

Shedsafe is a commercial operation, that is used to fund the wages of the operators. ShedSafe charges the shed suppliers (those that have the software and organise the materials) to have engineers review three of their shed designs. Now of course these three designs are not their typical shed, they are over engineered and would be under the meticulous watchful eye of the shed suppliers engineers. This does have the potential to pick up glaring errors, but as far as being representative of the typical shed supplied, there is no way!
To further increase the money revenue potential, ShedSafe charges around the $500.00 mark to each of the shed sellers or distributors. How does this shed seller accreditation get earned? Sit a simple test, a pop quiz on the AS/NZS 1170.2. Again ShedSafe is earned not purchased. Rubbish!

Is ShedSafe a Brand or an Accreditation Scheme?

It is clearly a Brand. Accreditation is a quality assurance system of all processes that ensure the end product is safe and sound – the Shedsafe system of accreditation does not achieve this.

What do Shed Suppliers and Sellers think of Shedsafe?

They think it is a necessity as if your competitor has it then you will loose sales as the consumer is being mislead.

What do Shed Buyers think of ShedSafe?

They think it is a regulatory body equivalent to the BCA or Australian Standards. Wrong, wrong, wrong!!!!

Is Shedsafe going to protect consumers?

In its current state there is no way consumers will be protected.

Does Shedsafe ensure a 15 year product roof warranty?

No – not even its benefactor does a warranty on 0.35BMT roofing, which is being supplied by some Shedsafe accredited members.

Are Shedsafe accredited suppliers allowed to use 0.35BMT on their roofs?

This is the key to this whole business, some do and some don’t! Shedsafe does not provide even basic consistency in shed supply.

ShedSafe – an offshoot of the ASI and The Shed Group!

This is a look at the Industry Body called ShedSafe and will raise many eyebrows in the shed industry through the dominance of its name. The presumed importance of a brand called ShedSafe with its accreditation deeming members have an exclusive right to the name is confusing to the consumer in the assumption it is a regulatory body. It is not such a body as all shed (Class 10A Buildings) constructions are governed by the BCA only. This fact is mentioned in the ShedSafe advertising. The advertising aspect is the point of this investigation and the implications that this “ShedSafe Group” imply not to the customers – but to its members and opposition – Non-members of compliance of shed construction!

Lets go through some of the ShedSafe details advertised to the customer and also to prospective shed suppliers.

Is your shed..ShedSafe? If not why not? This is marketing and nothing else – the problem is in the wording as follows by one of the accredited suppliers. It implies that it is the industry standard benchmark. Just to confirm all the major brand users of this ShedSafe have similar branding advertisements.

ShedSafe Accredited Supplier Advert

So we have an Industry body who commercially sprouts its advantages through its members directly aimed at customers through the statement above “This accreditation is the Industry Benchmark for Steel Sheds sold nationwide”! Why are they saying this when in reality they are not the benchmark but simply a brand as discovered below!

This is on the literature to shed suppliers – so make no mistake as to the marketing intentions of this statement! Join up and you will influence the purchasing decisions of most, if not all consumers shopping for sheds! This is an unbelievable statement from an Industry body to gain membership. Yet on the following piece of information you have option of deflecting opposition to shed quotation by referring to the “ShedSafe Website”

Yet in reality this is what you will receive from becoming a ShedSafe member – the below:

Not much promised to the customer who buys a shed except that the shed you have purchased is ShedSafe accredited. See some previous articles here on Shedeye for ShedSafe accredited sheds…

Next is a very important statement by ShedSafe conditions to shed suppliers:

Now this is an important concept – as all factors quoted must be performed by a licenced builder or a building certifier. Also an engineer may perform this duty. But how many quotes get published to customers without any inspection or site visit? This is an area that ShedSafe has yet to address!

NOW THE LAST PART OF THIS ARTICLE!

Stay tuned for Part 2, a much harder hitting continuation of this article.

As a consumer you might ask why should I care? Shedeye is a strong believer that the best companies look after their shed sellers, though excellent service and training and that results in a better product and service to you.

There are currently only 3 votes on the poll, however we will show the results at the end of every month.

For non shed readers, steel manufacturers create hot rolled steel, for sheds they then create cold rolled steel that is consumed by rollformers to create the portal frame for your shed.

At each of these stages there is a chance that steel is imported, the rollforming for custom designed sheds is usually done in Australia as the volume of the kit reduces the economics of importing, the lack of economies of standard colour and sizes and the delivery network make it more economical to do in australia.

Australia has high standards and locally produced Bluescope / Onesteel steel is of an excellent quality meeting all of the Australian standards. It is very unusual for Australian manufactured steel to crack during roll forming and usually has a very high consistency gauge. Ask any roll former and they will tell you that the quality of some imports is hopeless, and that it has a greater chance of splitting or causing issues with the machinery due to greater irregularity in steel gauge across the coil.

A growing portion of cold rolled coil is coming from overseas and you will not see made in Australia printed on any coil now days, just “made by manufacturer x”.

The question for the readers is, who was this steel imported from?

To explain the above further – the cold rolling part of the manufacture process starts off initially as cold, but as the material is rolled it is reduced in thickness and also gains heat. The steel at this point changes in mechanical property regarding strength etc, and also usually bathed in oil to prevent rusting if exposed to H2O and O2. This cold rolling gives the steel the mechanical properties required depending on the thickness required for end product use. These coils may also be heated (cold rolled annealed) to make the steel more flexible for folding processes, and the to a coating line to galvanise (coated in zinc) or Zincalume line (zinc-aluminium alloy) with painting (colour) if required. Cold rolled steel is then made available in different grades, properties and coating depending on the end usage. For example the purlin in the above photo is C20015 and is from a G450, Z350 coil. The G450 indicates the minimum yield strength in MPa, and the Z350 is the coating of Zinc – in this case was minimum 175 grams per square meter on the top an bottom of the coil. All these factors can vary depending on use – but what guarantess can be given that the imported coil used has the same strength, properties and coating requirements compared to that of BlueScope Australian made?

Shed Warehouse Directors?

Where are these People?

As a consumer you have a lot to think about when buying your shed.

One thing you should not have to think about when you are buying your shed is somebody selling you a shed, taking the deposits, not delivering and taking off with the money. It has happened a number of times that Shedeye knows about, however this one has seen justice prevail. Over a period of many years – The Shed Warehouse caused a lot of grief to customers wanting to own their dream shed – backyard retreat and storage area. They blamed everyone except themselves!

The sweet justice in this particular case is that one of the Directors, who unbelievably allegedly is still selling sheds in the industry (using a different name), was hit with a fine of $255,000 and an order to pay $600,000 in compensation.

Both the company and the director in question now have a criminal conviction recorded against them.

The second director will appear before the Magistrates Court at the end of September. This director is also allegedly still active in the Shed Industry!

The current development of furnaces for steel manufacturing is changing – but not in Australia. BlueScope and One Steel cannot compete with the giants in Asia, USA, India and Europe.

The answer is a non coal fired furnace – called an Electric Arc Furnace – the images below are copied from mainly sites in China and India. The use electricity to produce molten iron used every day in the steel industry.

Electric Arc Furnace

Electric Arc Furnace Diagram

Electric Arc Furnace 2

Electric Arc Furnace 3

As you can see this is not dissimilar to providing the required temperatures to liquefy Iron Ore Oxide to Iron (steel) plus lots of other very technical processes. But the great thing about this it reduces the CO2 emissions by 50% plus (to be confirmed) but the source of power is excluded in this exercise. All of Chinese, Indian, American and European Steel producers are going down this avenue. It will become the dominating source of steel while the CO2 emissions are a problem to the globe. Why is Australia not looking at this technology – because coal is cheaper than the extremely high power charges already being charged? With the introduction of the Carbon Tax on Power Stations and Steel Manufacture – this technology will not be available to Australia and we will become the third world manufacturers (polluters of CO2) and eventually shut majority of these manufacturing companies down.

WHY? Because power is already expensive and will become more so with the CO2 Tax Introduction. How does Australia make power? The majority is coal and the government will make a fortune in revenue from this CO2 Tax along all supply lines. Why would they invest in alternate sources of power that do not produce any CO2? Because there isn’t a tax on it yet! What is this magical power supply that doesn’t emit any CO2?

Nuclear Power Stations

The below is a photo of a power station in Europe (includes Russia) that are simply producing large amounts of energy without the CO2 poisoning of the atmosphere.

Nuclear power plant

How do these magic power stations work – people in Australia haven’t seen one here because they are banned and will be for a long time with the sentiment that has been placed in this country since the early 1970’s. Nuclear Energy is very different from Nuclear Bombs! Have a look at the world today that uses nuclear power.

Nuclear power plant usage

The grey areas (that include Australia) have no reactors – WHY? Because of the fear that we will all die if something goes wrong. Nearly 40% of the world’s landmass population has access to nuclear power! We don’t and will not until there is a big shift in the acceptance by the Australian public of this power source. If education is the key – then lobby groups from manufacturing industries will have to provide the input to start this process.

Australia Needs Affordable Power to Sustain its Economic Viability in Steel Manufacturing.

How can BlueScope and One Steel change (or even afford to research and develop) to this new technology? The simple answer is they will not. The CO2 Tax has just wiped it off the R&D board’s agenda at the annual production sustainability meeting. Australia cannot supply power for this process without utilising coal or gas. Wind, Solar, Geothermal, Wave and other renewable power supplies don’t compete with the economical supply of base load power that exists in Nuclear Power Supply.

Australia says on one hand – don’t use Nuclear power – but then says you pollute too much CO2 into the atmosphere – what are the steel companies going to do? Unlike TATA and other world steel giants they can’t use nuclear power from companies in China like the CHINA GUANGDONG NUCLEAR POWER COMPANY which supplies fuel (uranium fuel cells) to all of Chinas nuclear Power Stations. Where does the China Guangdong Nuclear Power Company get its Uranium Ore from? ANSWER is Australia. Aren’t we very clever? Sell it but don’t use it! The next good part of the story is that Energy Metals a 60.6% Chinese / Australian company was just granted a licence to export uranium from the Northern Territory to China for the next ten years.

WHY?

The questions raised are:

We can sell uranium for nuclear power but not to Australian companies for power production in Australia.

Over 50% ownership (by other countries) of uranium mines is allowed in Australia and they can sell it to whoever they want.

Nuclear power is very bad in Australia – but so is coal – we have to use wind, solar etc.

Cheap power, no CO2 polluting power (nuclear) and cheap, CO2 polluting power (coal) is not an option in Australia because one is banned and the other is taxed till it is no longer affordable.

How will the big manufacturers in steel, cement aluminium etc afford to develop new technology or even adapt to new technology if this CO2 tax is introduced.

Will everyone accept cheaper imports of overseas manufactured steel product to utilise in building etc?

How many manufacturing groups, associations, industry groups, federations, lobby groups etc are actually interested in saving this steel industry? I will be publishing a list of each group involved directly or indirectly of their involvement to date and also their intended involvement including “no comment” over the next few weeks.

This industry employs (directly & indirectly) the vast majority of Australian workers and this Tax and also the Ban on Nuclear Power will leave us behind.

I will leave you with two images – pick which ones are Australia and which one is China?

Australia

China

Where do we want to be in 100 years? 500 years? China is planning for the end of 3000 not 2012 like Australia.

Here’s the roofing perspective of all this – maybe pictures are easier to see the comparison?

The big question is which one is Australia and which one is China? A or B?

Picture A

Picture B

Email your answer to shed@shedeye.com.au and also if you require further technical data regarding this report or an RSS feed setup to your email address?

Buyers and Renters demand a Shed.

Properties that have a seperate workshop, shed or garage have an advantage over properties without, by demanding higher sell prices, additional rent and also increase the chance of a sale or rental. In regional areas where the mining boom is prevelant, real estate agents report the advantages to property owners of the contsruction of a double garage or shed. Investment properties are sort after with the shed as an extra.

Reported in The Australian Property Investor – the article relates to Queensland towns of Mackay, Gladstone and Bowen. The comment by local realtor David Bugeja recently ” the ones to sell fastest were the properties with sheds”. He also reported that for a capital outlay of approximately $12,000 in a shed or garage – this will add an expected increase of $20,000 to the sale price and an extra $20 per week in rent.

In the same article Mr. Tooma of The Shed Company Mackay said “for between $10,000 and $12,000 a fully erected shed can be placed on site with the approval certificate, earthworks and concrete done”.

Even A Small Shed adds Value

The property investor can purchase a property with an existing shed or simply add a double garage to a property without. The end result is an increase in capital gain within a short time period or a guaranteed extra rental income. As stated in the article – it is wise to check local council requirements as to approvals, easements, sewerage locations and location.

For an investment of as low as $12,000 for a double garage to return an additional $8,000 extra is an extremely attractive option.

Shed Industry – Carbon Day!

All the lobby groups, MP’s, Companies and Political Parties are busy in the corridors of power until the announcement is made on Sunday. What has the shed industry been doing in regard to this Carbon Tax to date? Not a lot! It’s a matter of how much will this impact our business after the details have been released for analysis! The questions are not on how will this impact global temperature, sea level change or the ability to reduce our carbon dioxide footprint – but how much will it cost the industry, how will sales be affected and how do we reduce the tax. No different to any tax – yet it is another TAX. Below are a few key points that may be important in the shed industry.

The carbon price: this is being based on a price of $23 per tonne of CO2 a low start but set to increase at 4% per year plus inflation.

Compensation: The shed industry may miss out – but there will be billions of dollars handed out to consumers at the rate of $10.00 per person per week. But only to who? Tradies, petrol, groceries, electricity, meat, coal etc etc.

Business: Trade exposed industries may be covered – lets see – the steel, mining, manufacturing, contruction and retail are all looking for a way out.

Electricity generators: this is the big one – electricity costs are rising every year and with this conversion to renewables, is it realistic.

Who: Agriculture is definitely out, but to what extent?

Transport: This is the big if? What will it cost to transport a shed to the customer in 2, 5 or 10 years time?

If the shed industry is compensated – the question must be asked “Why are we paying a TAX on something I will be compensated for?” For how long?

The shed industry operates on steel manufacture – a 100% fully recycleable product – so we are going to be influenced from BlueScope and OneSteel in regard to price rises.

This small diagram will ask whether it is possible to generate pwoer through renewables in the future to guarantee supply of AUSTRALIAN Steel after sunday?

Energy to Result

The sunday announcement will affect all concerned in the shed industry: owners, distributors, rollformers, manufacturers, erectors, engineers, council income, buyers, truck drivers and the list is endless. Keep an eye on the forum – because all the comments will be there! http://forum.shedeye.com.au/forum.php

Shedeye has talked extensively to people within the Shed Industry and it is unanimous that the shed industry is facing some tough times.

There are geographical pockets that are doing well, this is however the exception to the rule.

Shedeye has a theory that shed sales follow car sales reasonably closely, as both sheds and cars represent large discretionary spending for clients. Sheds represent purchases that can easily be put off, and given that Australians are paying back debt rather than making purchases, sheds are suffering as they are deemed a big purchase in these uncertain times.

Take a look as these ABS figures for Car Sales.

Short Term Car Sales

The above graph shows that the number of new car sales in the month from April 2011 to May 2011 alone has decreased by approximately 7.6% (Seasonally Adjusted). This is a whopping drop.

The next graph is showing an unfortunate trend.

Long Term Car Sales

There was a big drop after the GFC due to uncertainty, and over the last 3 years sales have not reached the same levels and are on a significant downwards trend starting in April 2010.

What does this mean for Shed Sales in the future? Shedeye makes a rash prediction that shed sales are going to drop further for at least another 6 months.

It is not all doom and gloom though, the 4 years of sub-par growth should see a good increase in pent up demand that will see shed sales growth increase, potentially to new highs in a couple of years.

To the shed sellers out there, keep you eye on Car Sales, as this may give you the heads up on your future cash flows.

Like everything in the shed industry, insulation is another area full of jargon. When you break it all down it is not too complex, the only thing you need to make sure is that you are being sold insulation for your shed that is adequate for your area and you are happy to take on the increase in your shed price.

If this is too much for you to digest with your morning coffee, then all you need to focus on is the R value. Effectively the higher R value the more thermal resistance (keeps heat in or out) that your insulation offers. This is important if you are considering adding an air-conditioner or heating to your shed or garage. The BCA (Building Code of Australia) has worked out the requirements based on your location and altitude for both the roof and wall.

The R values of the same roof or wall vary between summer and winter – depending on which way the heat is travelling. It is best to achieve minimum R value in both seasons for the walls and roof.

Follow these steps to work out your minimum R value and how to select an appropriate insulation.

Step 1 : Use the BCA zone classification to work out your zone

Step 2 : Work out the minimum R value for your roof and wall based on BCA minimum R values.

Roof

Wall

Step 3 : Select a material that satisfies you minimum R-value in both winter and summer

Building contractors are being targeted by the ATO from July 2012 and hence shed erectors are likely to be targeted also. If you don’t understand your tax obligations then you are likely to find yourself facing an ugly Tax Audit. The ATO have done their sums and from the building industry as a whole they expect to reclaim $300 million in 2014-2015 and over $500 million over four years.

The following article in the SMH states “Mr Shorten said some businesses would be required to report annually on payments made to contractors in the building industry including the contractor’s ABN. The data would then be cross-matched.”

Builders that get paid (contracted) by a single Shed Company (receiving more than 80% of their income from a single source).

Building sub-contractors that work for a single Builder. This applies to sub-contractors that work for Shed Companies that are the builder.

Any contractor or sub-contractor that receives more than 80% of their income from a single source.

If you are in any of these groups and you have income split with you spouse, and claimed company expenses then you are in for some hurt. Shedeye recommends that you seek the advice of your Accountant ASAP.

Don’t take this as advice, just a warning to get some advice! Talk to your Accountant today, if he / she has no experience with alienation of personal services income, find one that does!

There has been a considerable cost in surveying, compiling and analysing this data. Unless a clear community benefit is stipulated, we will not be providing the data for personal use. Personal use will attract a fee to obtain the analysis.

There are some brilliant, innovative and ingenious building practices, engineering, designs, software and products being introduced into the Shed market place. There are many smart people in the industry, and it is fair to say that Australia and New Zealand has the most sophisticated and advanced shed supply chain in the world.

Shedeye wants to recognise these innovators and to showcase to the world what they are doing and how they are doing it differently. Depending on the number of entries and the type of entries we are likely to have a number of categories such as innovation, technical, design, appearance, comical, best shed product or best use of a shed.

We are after applications and nominations, so please just leave a comment or drop us an email and we will investigate and add the innovator to our list of innovators.

We have received some emails requesting that we provide the entire list of sizes, well that is a lot of information, so to satisfy the request we will show you the top 6 shed sizes that have been designed using Shedeye.

Shedeye previously printed Shed Prices to go sky High, it was clear that the steel manufacturing sector in Australia is under serious threat with the introduction of a Carbon tax on the industry. Shedeye then showed the cold hard science behind the Steel shed industry and carbon. Shedeye also proposed that rather than a tax, perhaps all ozzies with the room in their back yards should plant a gumtree!

“The test has to be: can the price be passed through . . . if the price is not paid through, it is basically the end of steel manufacturing in Australia,”

and

“For emissions-intensive trade-exposed industries there should be no cost until our competitors face a cost and there certainly shouldn’t be a free ride for imports that sees manufacturers have to move their operations offshore and hide carbon in someone else’s backyard.”

If the manufacturing sector does not get an exemption is the government going to impose tariffs on imported steel? What a mess.

While BlueScope is in the business of making money and this involves lobbying and looking out for their own interests before all else, this is a clear case of the general public’s best interest.

The industry is threatened via big increases in shed prices, the disposable income of Australians is in serious trouble and even when the government starts to allocate the funds from the carbon tax (inefficiently and no doubt misappropriated), the damage may well have been done.